IRA contribution limits remain the same for 2015
The caps on how much we can stash in our individual retirement accounts won't be any higher next year.
Savers under 50 will be allowed to invest no more than $5,500 in their traditional or Roth IRA.
Those who are 50 and older can make an additional catch-up contribution of $1,000, raising the total to $6,500.
Those are the same contribution limits as for 2013 and 2014.
The Internal Revenue Service can only boost limits to keep up with inflation, and with the Consumer Price Index up only 1.7% over the past year, the IRS can't even increase the caps a little.
Congress, regrettably, has done nothing to raise the IRA contribution limits.
The only good news is that the income limits are getting a slight bump in 2015, which will allow a few more households to take advantage of an IRA.
Savers who don't have access to a 401(k) retirement plan through their employer can deduct contributions to a traditional IRA from their taxes, regardless of income or whether they're single, head of a household or married and filing jointly.
But here are the new guidelines for how much you can make and still deduct your contributions to a traditional IRA if you have a 401(k) retirement plan available where your work:
Those incomes are what the IRS calls a "modified adjusted gross income." That's your adjusted gross income with certain items added back in, including foreign income, foreign housing deductions, student loan deductions, IRA contribution deductions and deductions for higher education costs.
Married couples with one spouse participating in a 401(k) plan can:
- Deduct the full amount of their IRA contribution if their modified gross income is $183,000 or less.
- Partially deduct their contribution if their income is between $183,000 and $193,000.
- Deduct none of their contribution if their income is over $193,000.
Roth IRAs have limits as well, but contributions to Roth retirement plans are made with after-tax dollars, so none of it is tax-deductible.
As your income level rises, allowable contributions decrease. Here are the guidelines for 2015:
Of course, many of us aren't taking full advantage of our IRAs.
In 2012, individuals younger than 50 could contribute $5,000, and those who were 50 and older could contribute $6,000.
Yet only 6.6% of traditional IRA owners, and 25.1% of Roth owners, put anything in their retirement plans that year, according to a study of 25.3 million accounts by the Employee Benefit Research Institute.
Just 53.5% of those contributing to an IRA in 2012 saved the maximum amount possible, according to the nonpartisan research group.
Making significant, consistent contributions to an IRA is an important step along the road to financial security.
You can use our IRA calculator to see how maxing out your account would boost your retirement income.